Valuation matters – Nortel Networks today versus 5 years ago?

Toronto, Ontario (PRWEB) June 30, 2006 – The rise and fall of Nortel Networks (NT) is a classic story of why valuation matters. Just five years ago, Nortel had 95,000 employees. Today, this technology company has about 35,000 with plans to cut another 1,100. During the tech boom, its stock price became grossly overvalued based on every analytical measure. In fact, it had negative earnings –which made calculating the Price Earnings ratio impossible. The madness of the crowd ignored logic and let greed take over. Circa the turn of the millennium, the crowd was saying that the market could only go higher—and analytical measures like Price/Earnings (P/E) ratios were antiquated tools that do not apply to the new economy. The P/E ratio allows an investor to know how View the rest of this article